LSE and Deutsche Boerse in merger talks to create European heavyweight
| Reuters

FRANKFURT Deutsche Boerse and the London Stock Exchange are making a third attempt at a merger that would create a European trading powerhouse that could better compete against U.S. rivals encroaching on their turf.

The deal would combine the LSE's share-trading operation with the derivatives trading of Deutsche Boerse's Eurex in a group worth almost $30 billion. It would propel the companies to a similar scale as U.S. exchange ICE, which has taken a huge slice of the European derivatives markets.

Nearly 16 years after their first attempt to merge, the London and Frankfurt exchanges confirmed they were holding detailed discussions on an all-share merger that would give Deutsche Boerse shareholders a 54.4 percent stake and LSE shareholders 45.6 percent of a new company.

Two sources familiar with the matter told Reuters earlier the two were exploring a possible merger. One said the talks, using code names Delta for Deutsche Boerse and Luna for the LSE, were at an early stage.

"There can be no certainty that any transaction will occur," said the LSE, whose boss, Frenchman Xavier Rolet, has long sought a strong presence in derivatives - a major growth area.

Under British takeover rules, Deutsche Boerse must either make an offer or announce it will not do so by March 22, unless it obtains an extension from the UK mergers regulator.

Shares in both exchange operators, as well as others, jumped on the news, with LSE shares up 15 percent and Deutsche Boerse up 4.5 percent by 1537 GMT. Euronext shares were up 4.8 percent and Spanish exchange operator BME stock rose 2.3 percent.

Deutsche Boerse had a market value of $16.4 billion as of Monday's close, while the LSE's was $11.6 billion, according to Reuters data.

PREVIOUS ATTEMPTS

A merger would create a group that spans derivatives, shares and indices - offering pan-European trading, clearing and settlement under one roof.